Aviva has accused Nest of using “smoke and mirrors” when claiming its charges work out at 0.5 per cent within 10 years.
Nest operates a dual charging structure, with members paying a 1.8 per cent contribution fee on new investments alongside a 0.3 per cent AMC.
Nest quotes the fact that its charges work out at around 0.5 per cent within 10 years.
Nest director of communications and engagement Graham Vidler says: “The charges individual members pay in Nest and the impact on their pot does depend on a number of variables – for example, how long they save for, how much they save, investment returns.
“A saver who contributes consistently can expect their charge to be around 0.5 per cent within 10 years.”
Aviva head of policy for pensions and investments John Lawson highlights that this figure is the average a saver will pay in the 10th year, rather than the average across the first 10 years, and creates an unfair comparison with private sector schemes.
According to Aviva analysis, it will actually take 18 years before a Nest member who contributes £100 a month will see their annual charge drop below 0.5 per cent when calculated on a reduction in yield basis. Aviva estimates the Nest RIY over the first 10 years as 0.67 per cent.
Lawson says: “Reduction in yield is common currency in the industry for converting a multi-charge like Nest’s into a single charge. Nest is trying to use smoke and mirrors to reduce the perceived price that members have to pay.
“It is fair to say their charge works out at 0.5 per cent after 20 year but not after 10 years.”
Vidler says: “We are very clear on how our charge structure works and have publicly available documents setting out the impact of the structure for different individuals. We also do use RIYs in material focused on advisers and employers.”